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CBM Eligibility: Patent Must Have a Claim that Contains, However Phrased, a Financial Activity Element
BlogPTABWatch

A patent that is merely incidental to a financial activity is not sufficient to render that patent eligible for CBM review. Secure Access, LLC v. PNC Bank National Association et. al, Case No. 2016-1353 (Fed. Cir. Feb. 21, 2017). In Secure Access, the Federal Circuit reversed and vacated the PTAB’s decision that U.S. Patent No. 7,631,191 (“the ’191 patent) is a CBM patent. The Board had concluded that the method and apparatus claimed by the ’191 patent “perform operations used in the practice, administration, or management of a financial product or services and are incidental to a financial activity.” (Op. at 18). The Court concluded that the Board had improperly broadened the scope of the statute that defines a CBM patent, and that under proper scope, the ’191 patent is not a CBM patent.

Generally, the ’191 patent relates to computer security and to systems and methods for authenticating a web page. The Board determined that the ’191 patent is a CBM patent because, among other things, it is directed to solving problems related to providing a web site to customers of financial institutions—a service incidental to a financial activity. The claimed method and apparatus perform operations used in the administration of a financial product or service, according to the Board. Thus, the Board concluded that the ’191 patent is a CBM patent. The Board also noted that – although not determinative – the patent owner had sued approximately 50 financial institutions for infringement of the ’191 patent and, therefore, the patent owner’s litigation activity also weighed in favor of the conclusion that it was a CBM patent. (Op. at 8-9).

After determining the ’191 patent is a CBM patent, the Board concluded the patent is not immune from review as being directed to a technological invention. Ultimately, the Board concluded that all claims of the ’191 patent would have been obvious over the cited prior art and are unpatentable. (Op. at 9).

On appeal, the Federal Circuit determined that the Board erred as a matter of law, and improperly broadened the scope of the CBM review.

First, the Court stated that the CBM determination is limited to an evaluation of the patent’s claims. (Op. at 15). While patent claims are to be understood in light of the written description, noted the Court, that description cannot substitute for what may be missing in the patent claims. (Op. at 14).

Next, the Court stated that the Board improperly relied on certain comments of the PTO Director during the adoption of the regulations in determining that the CBM definition encompasses patents claiming activities that are “incidental to a financial activity, or complementary to a financial activity.” (Op. at 17). That quoted language is not, however, a part of the statutory definition of a CBM patent, stated the Court, and this Board’s expansion of the statute is “not in accordance with law.” (Op. at 18).

The Court then went further, stating “to be clear: the phrasing of a qualifying claim does not require particular talismanic words . . . the claim need only require one of a ‘wide range of finance-related activities.’” (Op. at 19). “The statutory definition of a CBM patent requires that the patent have a claim that contains, however phrased, a financial activity element.” (Op. at 19). As examples of patents within the scope of the CBM definition, the Court referred to its previously decided cases of Versata, Blue Calypso, and SightSound, each of which has been discussed on this blog.

Finally, because the Court concluded that the ’191 patent does not qualify as a CBM patent, the Court reversed the Board’s holding and vacated the Board’s other determinations, including claim constructions as they bear on obviousness and the obviousness determination itself. The Court’s remedy here is one the appellant did not even seek on appeal: the appellant asked the Court to vacate the Board’s determination that the patent is a CBM patent, and remand for the Board to address that issue under the correct definition. (Op. at 19.). Because of the Court’s decision, however, the Board does not appear to have jurisdiction to assess patentability—even the prior art patentability attacks—in the context of this CBM review.

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